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"We don't expect any single country to challenge India," said Sujoy Chohan, vice-president and research director for offshore BPO at Gartner. Instead, India's share will be whittled by a number of countries, which together will account for a 45% share of the offshore BPO market by 2007.

The BPO business requires English-speaking employees with a basic education - available in abundance in most countries, Chohan said.

India will lose business to some of these countries as it does not have a long-term plan for improving infrastructure and increasing the supply of quality employees for the BPO industry, he added.

India earned about $2.3bn (£1.3bn) from BPO services last year, according to Gartner. By 2007, the worldwide offshored BPO market is forecast to grow to about $27bn, Chohan said.

Gartner's estimates refer to work outsourced to offshore third-party providers, and do not include work sent offshore by US and European multinational companies to their wholly owned BPO subsidiaries.

A number of countries understand BPO's potential to create jobs and have put together integrated strategies to develop BPO business, Chohan said. These include Ghana, South Africa, Mauritius, Fiji, Malaysia, the Philippines, Australia, New Zealand and China.

"Even developed countries such as Australia and New Zealand, which did not react to the IT services opportunity, are now coming up with integrated roadmaps for BPO," Chohan said.

China is also likely to cut into India's share of the BPO market when its BPO business goes on stream in about three to five years, according to Chohan.

"China is still a long way [off] where English-speaking capability is concerned, and they won't compete with India where voice calls are concerned," Chohan said. "But they will chip away at the low-end of the market," including transaction processing work such as rules and form-based processing.

In contrast to countries with well-defined roadmaps for developing BPO, India does not have a clear strategy, Chohan said.

India's poor infrastructure adds to the cost of doing business there, he said, adding that in India BPO companies require a lot of redundancies such as backup facilities for power and telecommunications services.

India also does not have a formal long-term plan for creating a quality BPO work force.

"In just three years of BPO [in India] there is already a huge staff attrition problem," Chohan said.

Most English-speaking graduates in India have to be trained before they can be employed by BPO companies.

"Government should either reimburse companies for the cost of training, or put into place the training courses required either through the private sector or through primary, secondary and tertiary education in the country," Chohan said. Although countries like the Philippines have similar problems, the governments in these countries are being proactive.

The growth of the BPO business in other offshore locations is also likely to be fueled by Indian companies setting up operations in other countries. The BPO initiative in Sri Lanka, for example, is led by two Indian companies setting up operations there, Chohan said.

Executives at Indian BPO companies do not agree that the threat to India's market share is significant. Customers would like to reduce risk by outsourcing to more than one country, according to Prakash Gurbaxani, chief executive officer of TransWorks Information Services, a Mumbai-based BPO company.

Indian BPO companies are becoming more transnational in operations because they need to use newer resource pools and also to meet their customers' preference for multilocation suppliers.

But the impact of these moves will be incremental, Gurbaxani added.

Although there is currently a shortage of trained manpower for the BPO industry in India, this is only a short-term problem, according to Gurbaxani.

"Private sector training institutions have already seen the opportunity, and announced plans to train people for the BPO industry," Gurbaxani said. Also, as BPO companies move out of cities to small towns, more employees will be available, he added.

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